Compl-i - August 2009

Dealing with Complaints – A New Era

The newly formed Office for Legal Complaints(“OLC”) formally came into being on 1 July 2009. It has just issued its first discussion paper which can be found on the OLC website in which it invites input from the legal profession and consumer representatives alike on the proposed new Ombudsman scheme which it expects will come into effect towards the end of 2010.

The OLC chair, Elizabeth France, comments in her preface to the discussion paper that the OLC’s task is very clear. “We must create an Ombudsman service which meets the needs of legal practitioners and all those who use their services” and its aim should be “to resolve complaints without the need for either party to have recourse to the formal legal process.” The process is being developed on the basis of good complaint handling principles as set out by the British and Irish Ombudsman Association and which includes

Clarity of purpose
Accessibility
Flexibility of procedures responsive to individuals needs
Openness and transparency
Proportionality
Efficiency

and requires the Ombudsman to give quality outcomes which leads to positive change.

All the above are extremely laudable objectives and if applied in the way it is intended, should result in a more improved system to the one currently in place.

The emphasis, though, is clearly on encouraging firms to deal with complaints “in-house” if at all possible. Those who don’t or fail to co-operate with the Ombudsman will be in for a hard ride. It is therefore imperative that firms start gearing up now for the introduction of this new scheme so that it doesn’t come as a shock in just over a year’s time.

The discussion paper provides some draft principles for in-house complaints handling much of which already appears in Rule 2 of the Code of Conduct which we must all comply with in any event. Proposals include having an easily accessible, effective and transparent procedure for handling complaints promptly and fairly, identifying the person responsible for dealing with complaints and being able to demonstrate that all customer-facing members of staff know about and act in accordance with the procedure in place.

It also suggests that practitioners must communicate the procedure to clients by the following means:

A clear, simple short written summary (available on a firm’s website where there is one) and which must contain contact details to whom a complaint should be made aswell as explaining the availability of the Ombudsman scheme
Reference to the availability of the above summary in any document that presents a firm’s services in detail
Telling clients in writing about the availability of the summary when accepting instructions and
Providing a copy of the procedure on request or if a complaint is made.

If a complaint can’t be resolved within 5 working days to the complainant’s satisfaction, a written acknowledgement should be sent setting out the legal practitioner’s understanding of the complaint, who will be investigating it and keeping the complainant informed of progress. The investigation should be handled promptly and fairly to assess whether it is justified and if so, what remedy is appropriate and a clear and fair response should be provided as soon as reasonably possible but in any event, within 8 weeks from the original complaint.

It also expects firms to keep a record of any complaint received, the steps taken to resolve it and to analyse complaints in order to identify and correct any common causes of complaints (fundamental to a firm’s risk management approach in any event).

The discussion paper also sets out draft proposals for what will happen if a complaint ends up with the Ombudsman. He/she will determine a complaint by reference to what is, in his/her opinion, fair and reasonable in all the circumstances of the case. In deciding what is fair and reasonable, it will take into account (BUT IS NOT BOUND BY) what decision a court might make, the regulator’s rules of conduct at the time of the act/omission and what the Ombudsman considers to have been good practice at the time of the act/omission.

The Ombudsman can make the following directions to the legal practitioner in favour of the complainant:

To apologise
Pay compensation and interest for loss suffered
Pay compensation for inconvenience/stress caused
To put right any error or omission
To take any specified action in the interests of the complainant
To pay a specified amount for costs the complainant incurred in pursuing the complaint
To limit fees to a specified amount(and if necessary order re-payment of fees already paid)

Where it will impact the advisor most is in the limit of the award and the costs involved. The compensation limit has been increased to £30,000. In addition, it is proposed that firms who have over a certain number of complaints resolved through the scheme (the number is yet to be decided but is expected to be small) will have to pay a case fee (again the amount is to be determined) unless the complaint is abandoned/withdrawn or settled, resolved or determined in favour of the advisor AND the Ombudsman is satisfied that the advisor took all reasonable steps under their own complaints procedure to try to resolve the complaint. A firm with a large number of upheld complaints in a given year will not only feel the pinch in compensation terms but in having to pay the case fees as well. And if a decision is ultimately made to “name and shame”, the reputational damage could also be immense.

It would be trite of me to say that the answer is to avoid complaints being made – there will always be clients who will be dissatisfied no matter what you do. Complaints cannot always be avoided, particularly in the consumer world in which we now operate, but spending time now in building the right culture of client care within your firm, training your staff in managing clients’ expectations and ensuring that you have an effective internal complaints handling process in place will go a substantial way to achieving a well managed, client focussed, profitable firm and limit the prospect of coming face to face with the OLC.